Oil prices steady with Iran-Israel escalation in focus

Investing.com-- Oil prices steadied in Asian trade on Monday, retaining last week’s rebound as media reports suggested that an Iranian strike on Israel was likely to happen in the coming days.

Some encouraging economic data also aided sentiment, especially as traders bet that fears of a U.S. recession were overblown. More key economic data is on tap this week.

A market holiday in Japan made for relatively lower trading volumes. 

Brent oil futures expiring in October fell 0.2% to $79.50 a barrel, while West Texas Intermediate crude futures fell 0.2% to $78.74 a barrel by 21:09 ET (01:09 GMT). 

Iran strike on Israel imminent- Axios 

Israeli intelligence believes Iran will attack Israel directly and within days, Axio reported on Sunday.

The strike is likely to be in retaliation for the killing of Hamas leader Ismail Haniyeh in Tehran last month.

Israel was also seen keeping up its offensive in Gaza with a round of strikes over the weekend, pointing to little chances of deescalation in the long-running conflict. 

The sustained conflict saw traders attach a greater risk premium to oil prices, amid growing fears that a bigger war in the Middle East will disrupt oil supplies from the crude-rich region. 

Inflation readings awaited this week

Focus this week is also on inflation readings from a string of major economies this week, most notably the U.S.

Consumer price index inflation is due on Wednesday, and is expected to show some cooling in inflation through July- which bodes well for expectations of interest rate cuts in September. 

CPI data from major oil importer India is due on Monday and is also expected to show substantial cooling in inflation, while CPI data from the UK is due on Wednesday. 

Before last week, oil prices were nursing four straight weeks of losses amid fears of slowing economic growth, especially in top oil consumers the U.S. and China.

But some encouraging economic data from the U.S. suggested that a recession in the world’s biggest fuel consumer may not be imminent, helping spur some flows into crude.

Beyond economic readings, monthly reports from the Organization of Petroleum Exporting Countries and the International Energy Agency are also due this week.